Horse Auctions: The Good, The Bad, The Ugly

For some, a horse auction is an excellent place for buyer and seller to meet and arrive at fair market value for an animal. To others, a horse auction is the place where good money was spent on a horse which couldn't, or didn't, perform up to expectations. For still others it's a place where horses get their last chance, or a final journey to a slaughter plant.

To be sure, there have been many cases where unscrupulous dealers slipped crippled or incorrigible horses through auctions, and there have been a number of cases where unexpected illness showed up after a horse was brought home from a sale barn. And horses do go to slaughter from public auction. But there definitely is a positive side to public auctions.

In this article, we'll borrow from the title of a Clint Eastwood film and discuss the good, the bad, and the ugly of equine auctions. Along the way, we will pass on some tips from the experts on how the average horse owner can take advantage of auction offerings without getting burned.

To discuss the "good," we'll call on representatives of four auction companies, each of which is involved with a specific discipline or equine type. Obviously, they have a vested interest in providing a positive image for their industries, but were willing to answer any questions. The four spokespeople are Rogers Beasley, now director of racing at Keeneland Race Track in Lexington, Ky., but who for 20 years previously served as director of Thoroughbred sales for Keeneland; Bill Addis, owner of Addis Equine Auctions near Oklahoma City, Okla; Jann Parker, who with her husband, Bill, manages a highly successful monthly equine auction in Billings, Mont.; and Carol Smith, whose family is involved with the Wyo Arena and Ranch Broke Gelding Sale in Thermopolis, Wyo., each year.

The "bad" will involve a discussion of pitfalls for potential buyers, including horses which are not properly represented, questionable practices on the part of sales management, the transmission of disease, and the inability of some sales to provide an appropriate venue for certain types and classes of horses.

A discussion of the "ugly" aspects will cover the potential for abuse of horses trucked from one sales facility to another as a dealer seeks to fill out a load to be sent to slaughter. The special source here will be Temple Grandin, PhD, an associate professor in the Department of Animal Science at Colorado State University, who in 1998 conducted a study at an auction site and at equine slaughter plants to study the condition of horses being bought and transported to slaughter.

The Good

There are many reasons why selling horses at auction can be a good thing, says Keeneland's Beasley. Keeneland, which bills itself as the largest Thoroughbred sales company in the world, holds six sales and catalogues 7,000-8,000 horses per year.

"We spend a lot of time, money, and advertising to promote the sales," Beasley says. "We print 15,000 catalogues for each sale, and they are distributed all over the world."

It would be cost-prohibitive, he says, for an individual to try to duplicate Keeneland's promotional effort for a private treaty offering. Also, auctions such as Keeneland's bring together large numbers of buyers and sellers. Thus, the potential buyer is exposed to a great many horses from which to make choices, and the seller exposes his product to a wide variety of buyers.

There are other advantages, says Beasley. For example, at Keeneland sales, sellers are encouraged to have X rays taken of their horses' limbs 15 days or less before the sale and to place them on file in a "repository" hosted by the sales company. Those X rays can be viewed by potential buyers or veterinarians representing buyers.

Once a sale begins at Keeneland, horses pass through the ring in rapid-fire fashion. Often a horse will be in the ring for only about two minutes.

There is good reason for quickly gaveling down a purchase, says Beasley. First, with 380 or more horses to be sold per session, speed is of the essence. Second, with 49 barns that can house 1,600 horses, potential buyers at Keeneland have had ample opportunity to examine the horses on the grounds and to decide how much money they are willing to spend.

Not every horse which goes through the Keeneland sale ring is sold. Buyers have the right to set a reserve figure on their consignments; if the reserve is not reached, the horse is "passed out." No announcement concerning the reserve is made from the auction block, but a list of RNA (reserve not attained) horses is posted in the sales facility in the wake of each session. Often, buyers who failed to purchase a horse in the ring will check these sheets and contact the seller to make a deal after the auction.

Lemon Check

As is the case with all equine auctions, stories abound about the bargains and busts of horses purchased. The great Triple Crown winner Seattle Slew was bought at a bargain basement price of $17,500 as a yearling, and he went on to earn many millions on the track and in the breeding shed.

On the other hand, a handsome colt named Seattle Dancer sold in 1985 for $13.1 million, a record price for a Thoroughbred yearling that still stands. He earned only a little more than $150,000 on the track, and when placed in the breeding barn, proved to be a moderate stallion.

The old phrase, "You pays your money and you takes your chances" certainly applies to equine auction purchases. However, says Parker, sales management at public auctions can eliminate some of the "chance," especially as it relates to soundness.

Parker and her husband, Bill, manage the horse division of Billings Livestock Commission Company (BLS). There is a cattle sales division and a horse sales division. While Keeneland is involved only with Thoroughbreds, BLS is involved with a variety of Western-type horses.

Between 500 and 600 horses are offered at each monthly two-day BLS sale. Buyers and sellers come from 20 or more states and Canada, says Parker. "Between 400 and 500 potential buyers will be here for each sale. We have credibility, which means that both buyers and sellers keep coming back."

Each of their sales has a different emphasis. One might feature cutting horses, another will concentrate on roping prospects, and still another might feature barrel racers. Whatever the discipline featured, the horses are demonstrated prior to the sale if the seller so desires.

"In addition," says Parker, "we encourage sellers to bring videotapes of their horses and to show them to prospective buyers. We encourage sellers to get here early with their horses so they can visit with buyers and tell them about what they are offering for sale."

In an effort to protect the buyer from purchasing an unsound horse, she says, the animal is guaranteed to be sound through Monday noon following a Saturday BLS sale, and Tuesday noon following the Sunday session.

If the horse is found to be unsound during that period, the buyer's money is refunded and the seller becomes the owner once again.

"What we consider sound," says Parker, "is sight out of both eyes, good in the air, hit the ground sound on all four, and not to crib."

The time lapse guarantee assures the buyer that if drugs were used to camouflage unsoundness during the sale, their effects would have worn off before the guarantee expires.

Additionally, mares sold as guaranteed bred are vet-checked on the premises for pregnancy before entering the sales ring.

Horse Auction Trends

There has been a continuing phenomenon at the BLS sales that baffles some observers. "Loose horses" sell for much more than they do at most other sales. Loose horses are those which are turned into the ring without saddle, bridle, halter, or handler. They are sold "as is" without the benefit of a soundness guarantee provided for horses ridden through the sale ring.

At most small country auctions, such a horse is deemed, generally speaking, to be unsound or incorrigible. The only bidders on them are buyers who are looking for horses to be sent to slaughter. At most of these sales, the horse is weighed as it comes into the ring, just like beef cattle, and the buyers then can calculate the animal's value on the current per pound rate being paid by the slaughter plants.

At the BLS sales, however, loose horses have been selling for as much as $1,500 each. For six consecutive months, the top 50 have averaged in excess of $800, which is more than a slaughter buyer would be willing to pay under most circumstances.

Parker has at least a partial explanation: "This is the West. One of those horses might no longer be sound enough to be ridden circle on a 25,000 acre ranch, but it might be just fine for someone's backyard horse. The buyers, in some cases, are willing to take the chance. Then, too, there are a number of mares that are purchased as recipients for embryo transfer, and these buyers are willing to pay more than slaughter price."

There has been a subtle change over the years in horses being sought by potential buyers, Parker finds. The trend is toward the purchase of proven performance or riding horses, rather than young prospects. This, she opines, is a reflection of our busy society where people don't have the time--or don't want to take the time--to develop a young horse.

Reserve Prices

One knock against equine auctions is the use of a shill or shills by the seller--someone who doesn't plan to purchase a horse, but who bids him up so that the seller's reserve price will be obtained. Another knock is when the auctioneer puts in a bid against a lone bidder to push the price to the reserve bid level.

Addis does not look on a reserve bid as being unethical, providing that certain guidelines are followed. Reserve bids, he says, are not announced in advance because "that is privileged information" between the seller and the auctioneer."

If the auctioneer knows in advance that there is a reserve bid, he says, there is nothing wrong with him or her bidding against a potential buyer until the reserve is reached. However, once the reserve is reached, the auctioneer should stop. If he continues to bid, it would be unethical, he says.

"You are dealing with the owner's property, and if that person has set a particular value on a horse, that is his or her right," Addis declares. "The horse will remain the seller's property until that stipulated amount is reached. If the reserve isn't reached, the horse is literally sold back to the seller."

At some auctions, such as Keeneland, the seller is required to pay a commission fee on the last amount bid, just as though the horse had been sold. At other sales, there is a set amount as a "pass out" fee that is charged for each horse not meeting the reserve price.

"A reserve bid should not be a concern to the person who has examined both the horse and her or his financial limits," Addis says. "If the reserve turns out to be more than you can afford, it is no different than if someone bid past your financial cutoff point. You wouldn't own the horse then, either. You should only pay what you can afford, no matter what the circumstances."

The best approach, he says, is to assume that every horse in an auction carries a reserve bid unless it is announced otherwise.

There is one exception, and that involves an "absolute" auction. "If the sale is advertised as an absolute auction," he explains, "the auctioneer is legally bound to sell the horse to the highest bidder, no matter what the amount might be. There are no reserves."

Selling at Auction

Addis also has some words of advice for owners who want to sell their horses at auction: "Approach it the same way you would a horse show," he says. "Have that horse cleaned up and groomed to where it just glistens. If you are riding the horse into the ring, make sure that you are neat and clean and that your tack is clean and in good repair.

"Know your horse's strong points and be prepared to emphasize them. If the horse has a nice, smooth trot, call special attention to that when demonstrating. If it has a short, choppy lope, don't spend a lot of time loping. Maximize the strong points and minimize the weak ones, but be honest. Covering up a known fault will make for a disappointed buyer, and this will come back to haunt you if you plan to sell horses in the future."

In other words, he urges, present the prospective buyer with the most pleasant, but honest picture possible, and provide the auctioneer and ringmen with a horse which will enable them to generate enthusiasm among sale attendees.

Another bit of advice for the person planning to consign a horse to auction involves proper positioning. In other words, one wouldn't consign a working cow horse to an auction that catered to English pleasure performers.

Specialty Sales

An example of an equine auction that has carved a niche for itself in the roping and ranch horse world is conducted each year by Bill and Carol Smith and other members of the Smith family in Thermopolis, Wyo. The sale, which is kept to under 100 head, primarily features broke geldings which range in age from four to 10 years (the average age is six). There is another emphasis that draws buyers from 21 states and Canada--color. An effort is made to offer grays, blue roans, red roans, and buckskins.

Each year in the middle of May, the one-day sale plays to a capacity crowd at the indoor arena located at the fairgrounds in Thermopolis. The buyers who arrive from coast to coast know two things before they leave home: There will be a substantial number of gray, buckskin, and roan horses offered, and they won't be cheap.

The average gelding price this year was $9,370. The top-priced horse was King's Blue Quincy, a blue roan gelding--the 6-year-old was purchased by Tim Mullan of Sparks, Md., for $36,000. Mullan is the same man who set the Western horse world abuzz in 2000 when he attended the Smith sale and paid $81,000 for a gray 8-year-old gelding named Wyo Grey Bars Butch.

"We get a lot of our horses from Kansas, Missouri, and Iowa," says Carol Smith.

Every horse which goes through the sale carries a guarantee. "Bill talks about every horse," Carol Smith explains, "and the horse is guaranteed as represented in the sale ring."

The roping horses are demonstrated prior to the sale, and all trained horses are ridden through the ring.

The Bad

To this point, we have been taking a positive look at equine auctions through the eyes of reputable individuals involved with sales that have established credibility. However, all sales are not the same.

Some would argue, for example, that it is not appropriate for an auctioneer to bid in order to push the price toward the reserve that has been set--that bidding should be a competitive process between prospective buyers only.

Still others would argue that it should be announced from the auction block when the reserve is not met. The reason that doesn't occur is obvious from sale management's point of view. Announcing one "no sale" after another would soon diminish the bidding excitement. Sometimes "no sales" stem from consigning a horse to an auction that doesn't wind up having buyer demand for that type of individual.

If consigning a horse to a sale with a nonrefundable entry fee, it behooves the consignor to determine whether there is solid evidence that serious buyers will show up. Otherwise, it can be a waste of time, effort, and money. The consignor should make certain that the sale will be adequately promoted and that the type of horses being offered are in demand by the individuals toward whom the promotion is directed.

Caveat Emptor (Buyer Beware)

Most of the horror stories surrounding auctions involve buyers rather than sellers. Many of the stories originate from sales where there are no guarantees and the buyer must rely on the word of the seller.

A neighbor of mine went to an auction two years ago and bought what he thought was a good roping horse. When he got the horse home, he discovered that the gelding was a cribber. He loaded the horse into a trailer and returned to the sale facility the following morning and located the seller. In laconic Western style he told the man: "I brought back your halter, and there's a cribber inside of it."

His money was refunded.

Auctions can also be the spreading ground for disease. A Midwestern horse owner brought strangles into his herd when he purchased a young colt at an auction. The man's entire herd became infected, and one of the horses died as a result. He saved the rest at considerable cost in veterinary fees and medication.

In many parts of the country, monthly horse auctions are held in conjunction with cattle sales, or at the same facility on a separate day. At many of these sales, there are no guarantees, and it is a matter of buyer beware. Keep in mind that reputable people do sell quality horses at these venues, but opportunities for misrepresentation seem to be magnified.

Advice for Ringside

There are a lot of hazards for potential buyers at an auction, Hanson says, and the only way to avoid them is to do some serious homework in examining the horse before he enters the ring. A number of buyers go to an auction without doing their homework, then get carried away with the bidding when a particular animal comes through the ring. As a result, they can wind up either paying too much for the horse or buying one that isn't suitable.

"The auction barn," Addis concludes, "can be an excellent place at which to buy a horse providing that you take some advance steps to insure that you get what you pay for and that you pay only what you can afford.

"People shouldn't be afraid to buy at auctions," he says. "In fact, you can be more assured of getting value received for money spent than you often can at private treaty. When buying at private treaty, it's just you and the seller. When buying at auction, there are usually a good many horses being presented for comparison and a good many buyers who will help you evaluate fair market value."

However, he adds, that doesn't mean you should just blindly walk into the auction barn and when a horse comes into the ring that takes your fancy, start bidding.

"Get there ahead of time," Addis advises, "so you have plenty of time to look over the horses being offered and so that you can be afforded the opportunity of having the seller demonstrate him for you, or, better yet, try him out yourself.

"It also gives you time to come back for a second look and to talk to the people handling the horse," he continues. "I find that if the horse is from a major stable and has been assigned a groom, that person can tell me more about what the horse is really like than anyone else.

"If you are not an experienced horse person, take along someone who has had at least 10 years of experience--someone who can see and recognize a defect in conformation or temperament, for example. If it is a high-powered show horse that is likely to sell for lots of money and you are interested in it, carry things a step further. Have your veterinarian examine the horse before the sale and perhaps take some X rays (usually looking for joint or navicular problems)."

Of course, he adds, such an approach can be something of a trap. The veterinarian might find a defect. The question then is whether that defect will affect the horse's ability to perform.

"The point," Addis says, "is to decide in advance if you really want the horse. If the answer is yes, the next step is to decide how much you are willing to pay for it. Determine what you can afford--the amount that you will still feel comfortable with when the excitement of the auction has faded."

That auction fever, he says, can cause a buyer to spend more than he or she wants unless emotions are held in check.

"Once you have settled on an amount that you're comfortable with, don't budge from it no matter what the auctioneer or ringmen might say," he advises. "Their job is to get the most money they can for the horse. Your job is to buy it at a price you can live with. Just sit there and bid at whatever rate pleases you. When you reach your limit, get up and walk away until the horse is sold. If you stay there in the front row, that auctioneer and ringman might talk you into bidding more than you should."

Addis also has some advice for the novice auction-goer who has trouble keeping up with the auctioneer's chant.

"If you are at an auction and you aren't sure what the bid is, just ask a ringman or the auctioneer. Their job is to sell to you, not confuse you. And, bid at whatever speed is comfortable for you. Remember, the auctioneer is working for the seller, and it is his or her job to create both excitement and a sense of urgency on your part with a chant that is designed to motivate people to bid quickly. If you don't choose to bid quickly, don't. Be aware though, that if you drag your feet too much, you are in danger of having the gavel fall before you are done bidding.

"Sometimes, if an auctioneer feels the bidders are stretching things out too much and the sale is losing excitement and a feeling of immediacy, he will quickly hammer down a sale or two just to get back in control of the auction flow. You should be aware of that if you're bidding on a horse you really want and is within your means. You don't want to lose out on a purchase because you were dragging your feet.

"The auctioneer is in control and when the hammer falls, the bidding is over and a verbal contract has been completed between buyer and seller."

The Ugly

The "ugly" of horse auctions often doesn't involve the auction itself, but rather the practice of some slaughter horse buyers who purchase horses at one auction, transport them to another, and place them in pens while they seek to buy others to fill out a load. The problem is that strange horses placed together in a holding pen have a tendency to establish a pecking order, with the result sometimes being serious injuries from fighting.

Grandin of Colorado State University traveled to New Holland, Penn., to study the condition of horses offered for sale there on July 27, 1998. She and colleagues then visited U.S. equine slaughter facilities to further check on the condition of arriving horses. Her findings were filed with Tim Cordes, DVM, of the United States Department of Agriculture (USDA) on Sept. 13, 1998. Cordes was in charge of formulating federal rules and regulations for transporting horses to slaughter.

In a note to Cordes, Grandin wrote that, "fighting was a major cause of injuries. The second finding was that welfare problems which occurred at the point of origin and conditions caused by the owner created more severe welfare problems than injuries on trailers."

Grandin's findings were used by Cordes and the USDA to help write standards for hauling horses to slaughter. Those standards went into effect early this spring.

Grandin's description of horses arriving at the New Holland sale and the manner in which they were sold is descriptive of what happens at many general equine auctions around the country:

"Horses arriving at the sale had very little damage. All horses sold at the auction were individually tied up with a halter and lead rope in long rows in a barn. They were kept tied at all times. (Many sales will house horses in individual pens prior to being sold, rather than tying them.) They were either led through the sale ring with a halter or ridden. No horses were chased through the ring like cattle. (This is in contrast to some sales where 'loose horses' go through the ring without a handler). All horses that were sold in the sale ring could walk easily and had good mobility. Handling of horses that were in the auction was excellent; 168 horses, ponies, mules, and donkeys were sold through the sale ring.

"Every horse which was sold in the sale ring was observed (by Grandin and a colleague). The horses in the sale ranged from ponies and riding horses which sold for over $1,000 to slaughter horses in poor condition which sold for under $200. The condition of each animal was judged (by Grandin and a colleague) as it went through the ring. All horses sold were fit enough for travel."

Grandin noted that, "The new Holland sale does not accept horses which are severely lame or in very poor body condition."

Also typical of a general sale of that type were behavior observations recorded by Grandin. Four of the horses reared in the ring while being ridden; two bucked; one kicked; two were listed by the announcer as "not for beginners;" one draft horse "shied at everything;" an Arabian was announced as being "unridable;" and one horse was listed by Grandin as being high-headed and snorting.

These horses, one can conclude, were being sold because the owner no longer could handle them without fear of injury.

"The main place where horses got injured at New Holland," Grandin reported, "was in the 'drop-off' pens where dealers coming to the sale unload horses bought at a previous sale for feed and water. Some of these horses had come in from other states. Loose horses in the drop off pens fought during the sale. Horses put in the drop-off pens were not tied up with a halter and lead rope. After the sale, one pen contained three freshly injured horses. One horse had severe injuries and two had moderate injuries. Fighting was most likely the cause of the injuries."

Grandin's findings at New Holland and at slaughter facilities were incorporated into some of the new USDA regulations for travel to slaughter plants and in general recommendations from the USDA concerning drop-off pens.

For example, the transport regulations require that all horses be able to bear weight on all four legs, not be blind in both eyes, and not be likely to foal. The regulations also stipulate that aggressive horses must be segregated from others on the load to prevent injuries from fighting.

In the Guidebook for USDA's Slaughter Horse Transport Program, published in January 2002, the drop-off pen issue is addressed thusly by Grandin: "A survey of 1,008 horses indicated that 51% of all bruises were caused by horses fighting. Observations at slaughter plants and auctions indicate that a relatively small percentage of horses are very aggressive and cause severe injuries to other horses.

"Aggressive horses must be segregated. Some stallions can be safely penned with other horses, and some mares and geldings need to be put in separate pens. However, two stallions must never be penned in the same compartment.

"When strange horses are first mixed, they should be carefully observed. During the first two to 10 minutes, they may be quiet and explore their new pen. This is the lull before the storm. It is normal for some nipping and kicking to occur.

"An overly aggressive horse will quickly become obvious. It may back another horse in the corner and repeatedly bite and kick it. The aggressor must be placed in a separate pen. A very submissive horse that is repeatedly bitten or kicked by several horses may also need to be separated."

It becomes apparent that the auctions are indirectly, rather than directly involved with injuries from fighting. In most cases, steps are taken to prevent horses from becoming injured prior to the sale for an obvious reason: An injury-free horse is much more likely to sell for a good price than an injured one.

Yet, there remains the potential for injury in drop-off pens at auction yards. The USDA guidelines are just that--guidelines. The drop-off pen suggestions are not regulations that can be enforced.

However, slaughter transport rules are enforceable regulations and can indirectly improve how horses are handled in the drop-off pens. If a horse is seriously injured in a drop-off pen fight, the regulations might prevent him from being loaded and transported to a slaughter facility. Thus it behooves owners of these horses to keep the horse as injury-free as possible.

Fortunately, only a fraction of the horses offered at auction each year wind up in drop-off pens.

Conclusions

So, what can the horse owner conclude about equine auctions? There really is no black and white answer. In a manner of speaking, auctions reflect society in general. There are a whole lot of honest, reputable people out there, but there also are those who have larceny in their hearts.

So it is with auctions.

The vast majority of public auctions are credible venues that provide an excellent opportunity for buyers and sellers to meet at a central facility and do business. However, there will always be that minority of individuals who will seek to use the auction barn to dump a flawed product.

FURTHER READING

See the Transportation to Slaughter category under Transportation at www.TheHorse.com.

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